This is how data is transforming the Insurance industry

Data is no longer a means to an end. Today, data is an asset that can be leveraged internally and externally.

Businesses today can capture more information than ever before in multiple ways. Digital interactions with customers on mobile and stationary devices provide a footprint of interactions and inquiries. The Internet of Things has provided for billions of connected devices and objects fitted with tools to measure, record and transmit information. Customer purchases, responses to ad campaigns and marketing messages can be captured and analyzed.

Turning these data points into valuable insights requires data analytics programs that today can easily capture, store, analyze, display and report on information from myriad sources. These internal insights provide business leaders with the information needed in real-time to make better decisions.

Companies are also realizing that the data they gather, package and analyze is a valuable commodity that can be leveraged into new revenue streams.

What Does the New Role of Data Mean for Insurance Companies?

Insurance companies, like those in many other industries, are in a time of digital transformation. Disruptive technologies such as artificial intelligence, automation, the Internet of Things, data analytics, 3D printing, augmented reality and cloud computing are changing not only how business processes are completed, but also the way work is done. In some cases, digital transformation is causing companies to develop completely new business models.

At the same time, insurers need to remain vigilant, aware of the threat of digital disruption. New players are emerging that are taking completely different approaches to insurance. These disruptive players could potential uproot the insurance industry, much as Uber has for personal transportation and Airbnb has for lodging.

Insurance at its heart is a customer-centric industry. As such, the influence of data on customer expectations is an important consideration of how insurers use data.

Customers want to simplify and see transparency in their selection of insurance policies. They expect to be able to connect with their insurance companies across channels, no matter what device they’re using, where they are or when they need information. They also expect those with whom they interact will know the full extent of their previous interactions and be able to assist them quickly.

How is Data Changing How Insurance Companies Operate?

With changing customer expectations and the sheer expanse of data being collected, insurance companies are already changing their models and processes. Among the notable changes are the following:

• Investment in tools to better understand their customers, their expectations and their needs.
• Development of new coverage options to offer policies that are protecting more objects.
• Responding to an aging population whose insurance needs are changing in large numbers and quickly.
• Real-time processing and mobile apps that respond to the expectations of younger customers, who expect a digital-first approach. This speed and responsiveness are often contrary to the traditional ways insurers have conducted business.
• Using new technologies such as blockchain, artificial intelligence, machine learning,and the IoT to create better operational efficiencies and create more connections with objects and customers

What are Some of the Other Advantages of Embracing Data for Insurance Companies?

In addition to the digital transformations data can provide, more data and better tools to collect and report on data mean better compliance. Insurance companies are subject to increasing regulatory mandates at the local, state, federal and international level.

As insurance companies consider new uses for the data they collect, they need to be aware of the mandates from multiple agencies. The recently enacted General Data Privacy Regulation governs how companies share data with others for any customer that is a resident of the European Union. Companies that do business in the EU also need to abide by the capital requirements in the Solvency II Directive 2009.

Domestically, insurers need to report to state regulatory bodies and the mandates of the 2010 Dodd-Frank legislation. In all these cases, the ability to collect, report and use data makes regulatory reporting easier and more consistent.

What Challenges Do Insurers Face When it Comes to Using Data for Digital Transformation?

Digital transformation provides an extraordinary opportunity for insurance companies. However, those same companies may face obstacles that delay the usage and leveraging of data. Among these issues are:

• Lack of Policies and Procedures: Many insurance companies have grown as a result of acquisitions, meaning that the integration of systems and policies is challenging. The data-driven insurance company needs:
  • Data governance structures and policies
  • Consistent data definitions
  • Clarity of data ownership
  • Standards for the collection, storage and use of data
  • Data security guidelines
• Cultural and Organizational Roadblocks: An insurance company that wants to be successful using data in new ways must address:
  • Internal cultural differences in how data is seen, valued and used
  • Data stored in silos without standardization and a single source of information
  • Complex data structures
  • Inconsistent data formatting
  • Reluctance to share data internally
  • Data quality and multiple types and sources for data (structured, unstructured, collected, purchased)
• Technological Barriers: Technology is a common barrier or leveraging data. Challenges include:
  • Data stored both in the cloud and on-premises
  • Legacy systems, often highly customized
  • Lack of qualified internal IT resources

What Can My Business Do to Leverage Data?

For insurance companies, here are some recommendations for optimizing the opportunity for digital transformation:

• Invest in Data Analytics. Big data analytics tools allow insurers to collect and use data from multiple sources simultaneously, identify patterns, detect fraud better and resolve cases faster.
• Use Advanced OCR Software. Insurance still relies on paper, either that it generates or that comes from other sources. Sound OCR software reduces manual entry and reentry, allows for better storage, searching and analysis of unstructured data and accelerate processes.
• Improve Two-Way Communication. Insurers need to connect better with their customers, meaning apps, content and messaging tools. These tools need to be mobile-first and include features that capture interactions and results.
• Use AI for Better Interactions. AI tools, such as virtual assistants, can connect customers to needed information or live assistance that saves resources and routes issues accurately.
• Partner for Transformation. Insurers need strategic partners that help them with the collection, analysis, and use of data for digital transformation.

Data Axle is a data company that can help insurance companies with their digital transformations by providing verified business data. Our Data-as-a-Service (DaaS) solutions help insurers by providing accurate and current information, including complex data sets, consumer insights and mailing lists.

To learn more about how Data Axle can help with the digital transformation of your insurance company, schedule an initial consultation today.